Qualifying Recognised Overseas Pension Scheme


Firstly, what is a QROPS?

A Qualifying Recognised Overseas Pension Scheme (QROPS) is an acronym used to describe any UK-recognised pension transfer scheme that is based outside of UK jurisdiction. Pension Schemes like this are very popular for expats – people living and working outside of the United Kingdom.

Who would a QROPS benefit?

If you have a UK pension but are considering a permanent move out of the UK, or you are already living overseas, then it’s important to know that you have the option of moving your UK pension overseas. There are many fully compliant overseas pension schemes within reach that are registered with HMRC, allowing you to legally relocate your pension in order to take advantage of what a QROPS has to offer.

What Is the Benefit of a QROPS?

In short, there are many different reasons why expats choose to move their UK pension in to a QROPS.

One of the main benefits is the fact that you will be able to have greater control of your hard-earned investments regardless of where you reside. If you have more than one pension, you are able to consolidate them all into one manageable pension pot, pooling all the pensions together.

A QROPS also allows much greater flexibility with regards to investment choice, as well as when and how much pension you decide to withdraw. You can retire and take a 25% or 30% tax free lump sum at age 55, instead of waiting until the normal age of 65. If some years you don’t want to take any income, then you don’t need to. This can be a very useful tax-planning tool, making use of a personal allowance.

With a QROPS, you can also exercise greater control over your legacy. As long as you have spent at least five years living abroad, you can transfer your residual pension fund to a beneficiary in the case of your death without it being subject to any deduction, where as in the UK there is often a 50% or 45% reduction in the pension upon death.

How Do I Know If a QROPS Is Right for Me?

Determining whether you would benefit from a QROPS can be a tricky process, each case needs to be looked at on an individual basis and must factor in your own personal circumstances. More often than not, you will need UK FCA advice before the UK scheme will even allow you to move your pension.

That said, if you are planning to leave the UK and you are relocating to a country within the European Economic Area (EEA), then it’s likely there will be significant benefits from moving your pension to a QROPS.

Conversely, if you are considering moving to a country outside of the EEA, then a QROPS may still be an option, but in March 2017 the rules changed, shocking the offshore industry and has resulted in a QROPS being less appealing.

When it comes to pension planning, the only certainty is that you need to speak to an advisor who will give you up to date, unbiased information which will outline your options and allow you to make your own informed decision, based on facts and personal circumstances.

What happened in March 2017?

On 8 March 2017, the Chancellor of Exchequer, Philip Hammond, delivered the Spring Budget. The contents of his speech changed the offshore pension industry dramatically, to the detriment of the average expat.

Although many expected to see new restrictions on pension tax relief or further cuts into the annual and lifetime allowance limits on pensions, he in fact implemented a tax charge which will apply to individuals requesting transfers to Qualifying Recognised Overseas Pension Schemes (Qrops) on or after March 9 2017.

What New Charges Will Be Levied against QROPS Transfers?

Previous transfers to QROPS were always tax-free, with the one exception being if the member was already over their personal lifetime allowance (LTA) currently £1,073,100.

Under the new legislation, a 25 per cent ‘overseas tax charge’ may apply to transfers to QROPS. According to Philip Hammond, who was Chancellor of the Exchequer between 13 July 2016 and 24 July 2019, this has been introduced to support the government’s objective of promoting fairness in the tax system.

There are however a few exceptions where a member has a ‘genuine need to transfer their pension’ to an overseas scheme. Here are a few cases where exceptions may be possible:

  • The person in question resides in the same country (within the EEA) where they are transferring their pension.
  • The person resides within the EEA, and the pension scheme is also within the EEA, albeit in a different country to them.
  • The person resides outside the EEA, and their pension scheme is provided for them in the same country by their employer.

If a member transfers their pension, and then within five years their circumstances change, the government may reconsider the tax treatment on that individual. Payments transferred out of the new pension scheme may also invoke UK taxes during that same five-year period. Again, it’s extremely important you seek financial advice before making any decision, to ensure that you will not pay unnecessary tax.

How Will These Changes Affect the Primary QROPS Jurisdictions?

As you may already know, there are three common jurisdictions where qualifying recognised overseas pension schemes are located. If you already have a QROPS in one of the below jurisdictions, then the ‘old rules’ apply, however, moving forward please see below


As long as the member is a resident of an EEA country, then transfers into a Gibraltar QROPS will not result in additional 25% tax. However, individuals residing outside the EEA and planning to transfer into a Gibraltar QROPS will attract a 25 per cent tax charge based on the total transfer value of their pension.

Isle of Man

The same regulations will also apply to the Isle of Man. If a person resides outside of the EEA and wishes to transfer into an Isle of Man QROPS, their transfer will be subject to the 25 per cent tax charge. Those residing inside the EEA will not be subject to this tax.


As with the Isle of Man and Gibraltar, transfers into a Malta QROPS will only attract the 25 per cent transfer fee if the person making the transfer resides outside of the EEA. Those living and working within Europe are free to transfer their pension fund to a Malta QROPS.

Its important to note that if you move your pension in to a QROPS into one of the above locations, and then within five years move outside the EEA, it is possible you will be subject to the 25% tax charge.

These new regulations will also apply to transfers made between QROPS during the initial five-year period after transferring the pension out of the UK into an overseas QROPS. For example if you decide to switch QROPS jurisdiction.

The tax charge also works in the opposite direction. For example, if a 25% tax charge was initially levied on a person who lived outside of the EEA at the time of the QROPS transfer, then they become resident within the EEA within five years of the transfer, AND they bring their pension scheme with them, they will be able to reclaim the 25 per cent tax initially paid.

As you can see, the rules are quite complicated, and the potential 25% tax charge could leave a huge hole in your pension pot. If you would like to learn more about your own pension, please use the contact us page and someone at thepensioncheck will be in touch to help answer your queries.